Tenants and unit owners stung in ‘cruel’ deal between developers and energy retailers
A CRUEL “racket” operating between property developers and energy companies threatens to leave tenants such Dimitra Rodopis hundreds of dollars worse off. Find out if you’re impacted.
A “CRUEL” deal between property developers and utilities companies threatens to add hundreds of dollars more to new tenants and unit owner’s bills.
Industry sources 20 years ago said apartment blocks were built with individual meters for each dwelling. Developers also carried the cost of building that network.
Now, many apartment blocks have a meter for the whole building — installed by the energy provider — so they can lock in that building to one provider.
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New tenants or owners are told it will cost them hundreds of dollars if they switch providers and meters.
Dimitra Rodopis said she has been told she will have to fork out for a new gas, water and electricity meters, pay two electricity bills for the one service and a host of other charges if she doesn’t sign up with energy provider OC Energy.
She will also have endure a period with no electricity, gas or water while she switches providers at the one-bedroom apartment in a new development in Lewisham in Sydney’s inner west, where OC Energy has built an “embedded network”.
The company is pushing every new resident to sign up, whether they are a tenant or homeowner.
“It’s like I am being forced into going with one energy provider,” Ms Rodopis said.
“What if the service is terrible and I want to switch at a later time? Just because I am living in an apartment that should not mean that I am forced to go with one company.”
The 43-year-old is one of thousands of people who have been caught out by the new deals being stitched up between property developers and energy retailers, the President of the Property Owners Association John Gilmovich said.
Developers potentially save hundreds of thousands of dollars because energy providers carry the cost of installing the utility network within the building.
Utilities providers recoup the cost by getting access to a guaranteed group of customers.
The deals are in the sights of NSW Fair Trading Minister Matt Kean, who wants to change the laws by the end of the year.
“The developers and utility providers love this little racket going on,” he said.
“People should be able to choose the best deal that suits their needs. Currently they are being locked into contracts where the major beneficiary is a developer — and I think it is cruel.”
The changes would prohibit locking in future owners’ corporations into long-term contracts and make it compulsory at owners’ corporation AGMs to discuss current and future status of the utility contracts in the scheme.
“Consolidating the electricity use in a building to (typically) a single point of supply enables the bulk buying of electricity at both a retail and distribution network level for an embedded network operator such as OC Energy,” an OC Energy spokesman said.
“The ENO is able to package and offer competitive electricity rates to all residents.”
“The tenant is not being discouraged from moving to an alternate supplier. The steps as outlined are a factual representation of steps that will occur under the current energy market processes.”